<nettime> tel#, IP#, enum: _forbes_ on neustar

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<http://www.neustar.biz/pressroom/files/misc/article_7-8-02.cfm>

Forbes
On Hold 
by Matthew Swibel, 07.08.02

Jeffrey Ganek sits on a digital Fort Knox, but he doesn't own the key.

Jeffrey Ganek has a black book big enough to make Russell Crowe jealous.
Ganek's privately held firm, a Lockheed castoff called Neustar, holds the
exclusive government contract to keep electronic records of 160 million
phone numbers in North America. Its database gets updated every time
someone switches phone numbers and tracks the best routes when networks
are clogged. Its computers continually broadcast these changes to some
4,000 local and long-distance carriers. After the World Trade Center
collapse destroyed an AT&T switch, Neustar rerouted calls in less than 20
hours--a task that would have taken 45 days to do by hand. The Sterling,
Va.-based firm generated $100 million in revenue last year for such work.

Ganek's little-known database could be a treasure trove of data as
Microsoft and big rivals race to gain control of consumers' digital
identities for Web commerce and services. Neustar could mine the
information, repackage it and sell it to businesses that want easier ways
to reach consumers. But Ganek is in an excruciating fix. He doesn't
originate the data--the phone companies do--so he can't make a move
without their blessing. "We have to maintain people's trust," he says.

Neustar failed to show a profit last year and likely won't until 2003, but
Ganek thinks he can easily double revenue if he can persuade telcos to let
him mine their data and run a digital identity database.

AT&T used to handle Neustar's duties, but new competition created by the
Telecom Act of 1996 prompted a sudden need for an independent. Defense
contractor Lockheed Martin beat out a spate of contenders, including Perot
Systems, Nortel and IBM, for the right to manage the database through May
2006.

In 1999 Ganek and other Lockheed executives bought the group for less than
$100 million, with financing from Warburg Pincus, and renamed it Neustar.
Warburg, Deutsche Bank and other investors own 77%; Neustar's 325
employees own the rest. Ganek raised another $54 million in 2001.

The search was on for moneymaking ideas. One obvious one was helping long-
distance carriers recoup lost revenue. Each year, WorldCom, AT&T and other
providers can't bill for an estimated $1 billion worth of phone calls
because they can't identify which local network the phone calls originated
from--a simple task made difficult by deregulation of phone service.

Last February, with permission from carriers, Ganek began dipping into
Neustar's registry to retrieve the originating phone numbers and pass that
information along to carriers. Ganek collects a fee of nearly $1 per
query; he thinks he can generate an extra $20 million in revenue by 2004.

Neustar also snagged two contracts last year to dole out and manage
Internet domain names under the new headings of dot-biz and dot-us,
collecting $6 per address. Neustar has tallied a million new addresses so
far.

The biggest opportunity for Ganek: making phone numbers interchangeable
with Internet Protocol addresses, the ten-digit numbers used to route
e-mails, wireless data and streaming audio or video. The glue for this
would be an emerging technology standard called electronic numbering, or
Enum.

With Neustar as gatekeeper, telcos could sell a service that would let
businesses reach their customers via e-mail, cell phone, pager or PDA,
even if they only had a home phone number to begin with. Consumers would
have to grant permission on a Web site to allow this single point of
contact. But Sears could use e-mail to remind customers who last bought
stereos five years ago that their model is outdated. Or, in the event of
an air bag recall, Fordwould be able to dial an Explorer owner's phone
number and reach his up-to-date pager and e-mail as well.

Running an Enum database would easily double Neustar's revenue. Trouble
is, that pesky federal contract forbids Neustar from cranking the cash
register without the blessing of the telcos and Internet service
providers. Decisions on how to offer and how to price any of Neustar's
digital identity services lie mostly with the carriers--and the privacy
advocates who will resist every step of the way.




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